It is well recognized that the voltage stability of a power system is affected by the load model and hence, to effectively analyze the reactive power compensation of an isolated hybrid wind-diesel based power system, the loads need to be considered along with the generators in a transient analysis. This paper gives a detailed mathematical modeling to compute the reactive power response with small voltage perturbation for composite load. The composite load is a combination of the static and dynamic load model. To develop this composite load model, the exponential load is used as a static load model and induction motors (IMs) are used as a dynamic load model. To analyze the dynamics of IM load, the fifth, third and first order model of IM are formulated and compared using differential equations solver in Matlab coding. Since the decentralized areas have many small consumers which may consist large numbers of IMs of small rating, it is not realistic to model either a single large rating unit or all small rating IMs together that are placed in the system. In place of using a single large rating IM, a group of motors are considered and then the aggregate model of IM is developed using the law of energy conservation. This aggregate model is used as a dynamic load model. For different simulation studies, especially in the area of voltage stability with reactive power compensation of an isolated hybrid power system, the transfer function of the composite load is required. The transfer function of the composite load is derived in this paper by successive derivation for the exponential model of static load and for the fifth and third order IM dynamic load model using state space model.